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Does Ujb Have Offers It Can't Refuse?

November 17, 1991

Inside Wall Street

DOES UJB HAVE OFFERS IT CAN'T REFUSE?

The disappearance of easily accessible credit and the collapse of junk bonds have provided relief to managements that were once in constant fear of hostile raiders. But it may not be enough to prevent New Jersey-based UJB Financial from being forced into a merger.

Several big investors in the nation's 49th-largest bank-holding company (assets of $13 billion) are losing patience with current management. A group that has accumulated a 9.9% stake, led by money manager Neil Weisman, has formally urged UJB's board and Chairman T. Joseph Semrod to consider merging with another bank. Otherwise, says a filing with the Securities & Exchange Commission, it may seek to throw the directors out so it can pursue a merger or sell the company.

What's behind the group's aggressive stance? Weisman, president of Chilmark Capital, declined comment. But in its filing with the SEC, the Weisman group argued that it's prepared to join a third party, if necessary, to attain its objective. It urged the board to form a committee to discuss a merger.

Whispers are that the Weisman group is aware of interest from other banks about buying or merging with UJB. One big investor says that at least four major bank-holding companies are strongly interested: Bank of New York, PNC Financial, First Fidelity Bancorp, and CoreStates Financial. These companies are believed to have separately, though only informally, approached officers of UJB or the Weisman group. If so, the board may have to consider a merger. UJB Vice President Barrie MacKay said the board will "take whatever action is appropriate to enhance shareholder value." But he declined comment on whether UJB has been approached by any other bank. Spokesmen for the four other companies declined comment.

ON THE MEND. The recession and the downturn in Northeast real estate have severely hurt UJB, which owns 7 banks and 10 nonbank subsidiaries with about 250 offices in New Jersey and eastern Pennsylvania. The company posted a loss of 17~ a share in 1990, vs. earnings of $2.62 in 1989.

But the bank has been on the mend, managing to stay in the black during the first three quarters of this year. In the third quarter, UJB posted a profit of 16~, vs. a loss of 45~ a year ago. For the entire year, it's expected to earn 75~ a share. Indeed, the stock has been edging up in recent weeks, to 16 from 12 in July. And one analyst thinks that in a takeover or merger, the stock would be worth at least 25.GENE G. MARCIAL